The S&P 500 had its worst day of the year on Tuesday, but the index closed out the trading week with three straight up days. So what's next for the market? Please take part in our poll below which asks whether the S&P 500 will be higher or lower than its current level one month from now. We'll report back with the results on Monday before the open. Have a great weekend!

Will the S&P 500 be higher or lower than its current level one month from now?HigherLower Free polls from Pollhost.com

A total 4,323 credit-default swap contracts can now be settled after ISDA’s determinations committee ruled the use of CACs is a restructuring credit event. Before the ruling, Greek swaps rose to a record $7.68 million in advance and $100,000 annually to insure $10 million of debt for five years.

The decision was unanimous, New York-based ISDA said today in a statement distributed by Business Wire. An auction to set the size of the payouts will be held on March 19.

Auctions will set a recovery value on the bonds and swaps sellers will pay buyers the difference between that and the face value of the debt. Wolfgang Schäuble Issues Another Warning to Greece

Billions of dollars are to be paid out in insurance-like instruments as Greece on Friday pressed ahead with the largest ever sovereign debt restructuring.

However, there was a long delay over the decision by the ISDA determinations committee, which is made up of 15 global banks and investment funds, that annoyed some investors.

Uncertainty still hangs over the CDS market as an auction process to decide the amount of pay-outs may not take place for another week.

Bill Gross, who runs the world’s biggest private bond fund at Pimco, warned that CDS had been undermined by the saga. “The rules have been changed here,” he said in a radio interview. “The sanctity of their contracts is certainly lessened.”

Wolfgang Schäuble, the German finance minister, said: “Greece has today been given the chance to make it. But Greece will now have to seize this chance itself.”

In a stern message to Athens, Olli Rehn, Europe’s economics commissioner, called the second bailout “a unique opportunity not to be missed” and said: “I now expect the Greek authorities to maintain their strong commitment to the economic adjustment programme and to rigorously and timely implement the policy package.”

Greece’s lenders are mounting an unprecedented surveillance campaign to try to guarantee the government’s commitment. At least four officials from the commission’s economics department will now be stationed in Athens full time – along with representatives from the International Monetary Fund and the European Central Bank – to vet government policies.Eurozone Exit Trigger Is Cocked

Greece will exit the eurozone. However, the timing is still in question.

I suggest Greek politicians will not meet increasing conditions placed on Greece by Germany and that later this month funding will be cut off triggering a Greek return to the drachma.

If so, look for enough funds to be dispersed to Greece in the next couple weeks that allow a quick round-trip to the ECB to make the ECB whole. Once the ECB is in a no-loss situation, the roof can easily cave in.

The exit trigger is cocked. All it takes is for either Greece or Germany to pull it.

On Tuesday gold prices continued to break down, falling for a fifth consecutive day breaking below the 200-day moving average. On February 6th we suggested getting out of the speculative long positions, and reiterated it yet once again just a day before the crash. But this week on Tuesday, our SP Gold Bottom Indicator flashed a long-term buy signal. The indicator is just one of the unique proprietary investment tools developed by Sunshine Profits, available only to our subscribers. We tend to take this particular signal seriously since it has proved to be uncannily accurate in the past (you can click the chart to enlarge it if you’re reading this essay on sunshineprofits.com).

In 2011, for example, it flashed a buy signal five times on:

January 24th , right before a major bottom,

June 29th , a few days before a major bottom,

August 26th , followed by a $200 rally,

September 27th , followed by a $150 rally

Dec 19th, a few days before a major bottom

All in all – 5 out of the last 5 times this signal flashed, a substantial rally followed – either immediately, or a few days later. Consequently, the situation in gold is now bullish for the medium term.

To see if our SP Gold Bottom Indicator will hit the mark yet again, let’s take a closer look at the markets that can at times drive the prices of precious metals. We will start with the USD Index (charts courtesy by http://stockcharts.com.)

There has been no real change this week as the index rallied a bit early in the week and then declined. Thursday’s closing level is a bit more than a point higher than a week ago, so the overall change for the week is quite minimal so far.

The index level is still quite close to the long-term resistance line and no breakout has been seen. At this point, the odds appear to favor a continuation of a downtrend here in the USD Index.

In the short-term USD Index chart, a small rally began after the cyclical turning point was reached, and the USD index approached the 80 level, reaching 79.92 only to decline thereafter. It is unclear whether the top is in or if higher index levels will be seen anytime soon.

The odds based on the long-term picture appear to favor a move to the downside with very limited upside potential from Thursday’s closing index level. The downside target levels at this time appear to be close to two important support lines in the range of 77 and 75 respectively.

The situation is the USD Index is tense and at this time appears slightly more bearish than not for both: long- and short-term.

The long-term S&P 500 Index chart provides us with bearish indications this week. Target levels based on this chart in previous weeks were not reached as the S&P 500 moved about half way between the previous top and our previous target of $1,320. This downside target level appears likely when comparing recent trading patterns with those seen at the end of 2010. The decline so far has been small, so more consolidation is possible before the rally resumes.

In this short-term SPY ETF chart, we see a correction to an important support line, followed by a move higher. This is a bullish indication and an immediate move to the upside is indeed possible from here.

The situation in the general stock market is mixed with small moves to the downside possible. The S&P 500 will likely go no lower than $1,320 and this appears to be about 65% to 70% probable.

We are not certain if the correction is over or if another move to the downside is coming; the long and short-term pictures are simply not clear at this time.

Our correlation analysis provides information that the coefficients between the precious metals sector and the general stock market weakened this week. The uncertainty in the stock market picture is therefore not as important for the precious metals, though it is a bit more important for silver than gold. The correlation between the USD Index and the precious metals remains in place and negative.

Please note that our general outlook on the precious metals market has changed from a bearish one, to a bullish one. If you recall what we wrote in our last essay on precious metals and manipulation (March 6th, 2012):

The situation (…) is normal once again (metals move along with stocks and in the opposite way to the USD Index). Consequently, what’s bullish for USD and bearish for stocks is bearish also for the precious metals market.

The picture has changed now – the rally in the dollar seems to be over and, therefore, the general short-term outlook for precious metals is more bullish than not. However, we would be far from suggesting that an immediate move up is a sure thing now.

Summing up, as the short-term outlook for the dollar is rather bearish and the greenback continues to trade in the opposite direction that precious metals do, the implications are more bullish than not for gold, silver and gold and silver mining stocks. The medium-term trend is up.

To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It’s free and you may unsubscribe at any time.

All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

By reading Mr. Radomski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Shares of Smith & Wesson (SWHC) are up over 20% today after the company reported stronger than expected Q4 earnings this morning. We'll leave it up to you to decide why a gun manufacturer is seeing such strong earnings.

SWHC's rally is really boosting the performance of our Top Stocks Under $10 list that we published on 12/22/11. Year to date the names highlighted are up an average of 15.1% compared to the S&P 500 which is up 9.26% and the Russell 2000 which has risen 10.59%.

Going forward, our Top Stocks Under $10 will be updated on a quarterly basis, so if you are not yet a subscriber and want to ensure that you receive this report when it is published later this month, sign up for Bespoke Premium today!

With the bull market turning three today, below we highlight the performance of the Bloomberg IPO index over the last three years compared to the S&P 500. The Bloomberg IPO index tracks the performance of US initial public offerings over their first year of trading.

As shown, the S&P 500 has outperformed the Bloomberg IPO Index by 28 percentage points since the bull market began. The IPO Index was outperforming the S&P 500 through the end of 2010, but the big drop the market saw in mid-2011 really hurt IPOs. During the recent market turnaround over the last four or five months, the two indices have performed roughly inline.

We've heard multiple comments in the media recently about IPOs performing poorly from their opening prices (the first price that regular investors can buy the stock at once it begins trading). However, based on IPOs over the last six months, that simply hasn't been the case. There have been 50 IPOs over the last six months, and below we highlight their performance from both their IPO price and their opening price on the day that they go public. Of the 50 IPOs, 41 (82%) are up from their IPO price and 36 (72%) are up from their opening price. The average change of the 50 stocks from their IPO price to date is 27.46%, while the average change from their opening price to date is 15.92%.

As shown, InvenSense (INVN) has performed the best from it opening price at 108.43%, followed by Michael Kors (KORS), Clovis Oncology (CLVS), Mattress Firm (MFRM) and Imperva (IMPV).

Intermolecular (IMI), Groupon (GRPN), Digital Domain Media (DDMG) and Angie's List (ANGI) are down the most from their opening prices.

In the last year, the civilian population rose by 3,584,000. Yet the labor force only rose by 1,569,000. Those not in the labor force rose by 2,014,000.

In February, the Civilian Labor Force rose by 476,000.

In February, those "Not in Labor Force" decreased by 310,000. If you are not in the labor force, you are not counted as unemployed.

Participation Rate rose .2 to 63.9%

Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Over the past several years people have dropped out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low. Some of this was due to major revisions last month on account of the 2010 census finally factored in. However, most of it is simply economic weakness.

Jobs Report at a Glance

Here is an overview of today's release.

US Payrolls +227,000 - Establishment Survey

US Unemployment Rate steady at 8.3% - Household Survey

Average workweek for all employees on private nonfarm payrolls was unchanged to 34.5 hours

The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged higher 0.1 hour to 33.8 hours.

Average hourly earnings for all employees in the private sector rose by 3 cents to $23.31

Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data.

Nonfarm payroll employment rose by 227,000 in February, and the unemployment rate was unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and businesses services, health care and social assistance, leisure and hospitality, manufacturing, and mining.

Between January 2008 and February 2010, the U.S. economy lost 8.8 million jobs.

Over the last two years, nonfarm payrolls have added 3.5 million jobs. Of the 8.8 million net jobs lost between January 2008 and February 2010, 40 percent have been recovered.

Statistically, 127,000 jobs a month is enough to keep the unemployment rate flat. The average employment gain over the last two years has been 145,000, barely enough (statistically speaking) to make a dent in the unemployment rate.

Over the prior 12 months, average hourly earnings have increased by 1.9 percent. In January, the Consumer Price Index for All Urban Consumers (CPI-U) had an over-the-year increase of 2.9 percent; growth in prices has recently been outpacing growth in earnings.

Not only are wages rising slower than the CPI, there is also a concern as to how those wage gains are distributed.

BLS Birth-Death Model Black Box

The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.

The Birth-Death numbers are not seasonally adjusted while the reported headline number is. In the black box the BLS combines the two coming out with a total.

The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.

Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.

Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.

Birth Death Model Adjustments For 2011

Birth Death Model Adjustments For 2012

Birth-Death Note

Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid.

Household Survey Data

click on chart for sharper image

In the last year, the civilian population rose by 3,584,000. Yet the labor force only rose by 1,569,000. Those not in the labor force rose by 2,014,000.

That is an amazing "achievement" to say the least, and as noted above most of this is due to economic weakness not census changes.

Decline in Labor Force Factors

Discouraged workers stop looking for jobs

People retire because they cannot find jobs

People go back to school hoping it will improve their chances of getting a job

People stay in school longer because they cannot find a job

Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Part Time Status

click on chart for sharper image

Part-time status shows little improvement vs. a year ago.

Table A-15

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Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation not to be confused with "good" approximation.

The official unemployment rate is 8.3%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 14.9%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Grossly Distorted Statistics

Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.

Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.

BLS vs. Gallup

Gallup has the unemployment rate at 9.1% not 8.3% and the "underemployment" number at 19.1%, not 14.9%.

Bear in mind the Gallup numbers are not seasonally adjusted but the BLS numbers reported above are. Nonetheless, it's entirely safe to say that 19.1% is far closer to the truth than 14.9%.

Today marks the third anniversary of the end of the big bad bear market of 2008-2009, and the beginning of the current bull market that began on 3/9/09. Believe it or not, while some investors still refuse to acknowledge that we are in a bull market, the current bull now ranks as the ninth longest ever. It is also the only bull market in history that lasted three or more years and was up 100% or more during the first three years.

Why not celebrate the three year anniversary of the bull market by playing a game of Collapse!?

Collapse! is the commemorative game of the Financial Crisis that takes a light hearted approach to some very serious events. The game allows players to re-live the tension, anxiety, and second guessing characterized by this crazy period in history, but also to never forget just how bad things got. While global markets currently find themselves in a frenzy over the debt crisis in Europe, Collapse! allows investors to relive and reminisce about our own "bad old days."

In the game of Collapse!, each of the 54 blocks highlights one of the factors or events that helped create the crisis or hasten its escalation. What better way to relive the financial turmoil than to grab some family or friends and try to build your own financial fortress that's too big to fail! After stacking the blocks (the included instructions provide a useful frame), players take turns pulling them out one by one until the entire structure collapses!

The 54 blocks in each commemorative game fit nicely into a sleek wooden box that makes an excellent display at your office, your home study, or even your child's toy room. Collapse! is an excellent gift for clients, friends, or family members, and serves as a great collector's item and history lesson of the financial crisis.

Bespoke's Paul Hickey appeared on CNBC's Fast Money yesterday to discuss this morning's Non Farm Payrolls report and the impact of the employment report on the equity markets. To view the clip, please click on the link below.

I suggest that Portugal is doomed whether or not there is "Legal Skull-Duggery". However, it's perfectly fair to suggest that LSD will indeed make matters worse.

From Pritchard ...
Last month the European Central Bank exercised its droit du seigneur, exempting itself from loses on Greek bonds. The instant effect was to concentrate more loss on other bondholders. "This has set a major precedent," said Marchel Alexandrivich from Jefferies Fixed Income. "It does not matter how often the EU authorities repeat that Greece is a 'one-off' case, nobody in the markets believes them."

The ECB holds €220bn (£185bn) of Greek, Portuguese, Irish, Spanish, and Italian bonds. Its handling of Greece implicitly subordinates private creditors in each country. All have slipped a notch down the pecking order.

This might not matter too much if Greece were really a "one-off" case but markets are afraid that Portugal will tip into the same downward spiral as austerity starts to bite.

Citigroup expects the economy to contract by 5.7pc this year, warning that bondholders may face a 50pc haircut by the end of the year. Portugal's €78bn loan package from the EU-IMF Troika is already large enough to crowd out private creditors, reducing them to ever more junior status.

EU leaders said last June that "Greece is unique" and promises that haircuts would "not be replicated in Portugal". They have since pledged that the EU's new bail-out (ESM) fund will not have protected status. ECB Lies

It's safe to stop right there. No one in their right mind can possibly believe EU leaders or the ECB. Certainly the markets do not believe in such fairy tales.

Portugal is interesting in that neither LTRO had much effect. For example, 10-Year Portuguese government bonds yield 13.86%. 2-year bonds yield 12.54%. Meanwhile German 10-year bonds yield 1.8% and German 2-year government bonds yield .16%.

Portugal cannot possibly survive on those spreads. Thus, what has to happen, will happen. Major haircuts are coming.

Pritchard notes fundamental reasons why.
Combined public and private debt is 360pc of GDP, 100 percentage points above Greece. This is a huge burden on a shrinking economic base. Its current account deficit was still 8pc of GDP last year, much like Greece. Both countries are overvalued by 20pc on a real effective exchange rate, though Portugal has barely begun to cut unit labour costs.

Dimitris Drakopoulos from Nomura said Portugal relied on "fiscal engineering" last year to massage deficit figures, raiding 3.5pc of GDP from private pension funds.

Matters will come to a head soon. The IMF must decide by September whether Portugal needs more money and debt relief. If Portugal now spirals into a Grecian vortex, large haircuts loom. This time EU leaders will have to accept that their own taxpayers will suffer losses - avoided until now - or violate their pledge.

Europe's handling of Greece has guaranteed that global funds will rush for Club Med exits at the first sign of trouble. The next spasm of the debt crisis will that much dangerous if it ever comes. As the saying goes: Hell hath no fury like an abused bondholder. Bleeding Profusely From Help

Portugal is poised to blow up anytime now. Greece is already pricing in further writedowns. Expect Ireland and Spain to ask for writedowns.

Eventually voters in Germany, the Netherlands, Finland, or possibly even France will get fed up with these repeated bailouts at taxpayer expense and demand action. So will voters in Spain, Greece, Portugal, and Ireland, all bleeding profusely from "help".

It is quite amusing to watch these bald-faced liars at the ECB, EMU, and IMF, pretend everything is OK just as the sovereign debt default tsunami is inches from shore.

I am rather amused by the absurd headline on Financial Times this evening: "Greek debt swap support close to 95%"
The largest debt restructuring in history was heading for a successful outcome last night as Greece looked set to see a participation rate of close to 95 per cent for its €206bn bond exchange.

One person involved in the deal said that more than 90 per cent and possibly more than 95 per cent of investors had taken part, assuming collective action clauses (CACs) were used to bind dissenting holders of some bonds.

The high participation rate is only possible through the use of CACs, which will make the offer binding on all holders of Greek-law bonds. That in turn will almost certainly trigger pay-outs under credit default swap insurance.

“This extraordinarily difficult deal … allows Europe to avoid what could have been an enormously costly, disorderly default,” Charles Dallara, chief negotiator for Greek bondholders, said on Thursday during a visit to Brazil.Difficult Deal

Yes indeed, the deal was so difficult that the Greek parliament chose to enforce it on holdouts by gunpoint, more specifically retroactive collective action clauses (CACs).

Here is yet another measure of "success"
Financial markets are already betting Greece will default again in the future. Grey market pricing for the new Greek bonds to be issued as part of the exchange ranged from 17 to 28 cents on the euro, a highly distressed level, according to indicative quotes seen by the FT.

The pricing equates to a yield on the new bonds of 17 to 21 per cent about where Greek yields stood in the autumn and far worse than the yield on debt issued by Portugal, which has also received a bailout. The definition of "success" at 17 cents on the dollar for new bonds (and even then only achievable at gunpoint) is so preposterous I hardly know what to say.

Europe has ring-fenced Greece's debt crisis for now but its escalating recourse to legal legerdemain has shattered the trust of global bond markets and may ultimately expose Portugal, Spain, and Italy to greater danger.

We ran our decile analysis on the S&P 500 to see how stock performance during the brief pullback from 3/1 to 3/6 has affected performance over the past two days. To run the analysis, we break the index into deciles (10 groups of 50 stocks each) based on stock performance from 3/1 to 3/6 and then calculate the average performance of the stocks in each decile since 3/6.

As shown below, the 50 stocks that went down the most during the pullback are up an average of 2.63% over the past two days. The 50 stocks that performed the best during the pullback are only up an average of 0.83% over the past two days. Based on this analysis, traders have been quick to buy back stocks that dipped the most.

For those interested, below are the 25 best performing stocks in the S&P 500 over the past two days.

In tomorrow's BLS payroll report, economists forecast an increase of 225,000 private jobs and total non-farm payrolls growth of 210,000. ADP expects 216,000 private jobs. I will take the under.

Meanwhile Gallup reports U.S. Unemployment Up in February
U.S. unemployment, as measured by Gallup without seasonal adjustment, increased to 9.1% in February from 8.6% in January and 8.5% in December.

The 0.5-percentage-point increase in February compared with January is the largest such month-to-month change Gallup has recorded in its not-seasonally adjusted measure since December 2010, when the rate rose 0.8 points to 9.6% from 8.8% in November. A year ago, Gallup recorded a February increase of 0.4 percentage points, to 10.3% from 9.9% in January 2011.

In addition to the 9.1% of U.S. workers who are unemployed, 10.0% are working part time but want full-time work. This percentage is similar to the 10.1% in January, but is higher than the 9.6% of February 2011.

As a result, Gallup's U.S. underemployment measure, which combines the percentage of workers who are unemployed and the percentage working part time but wanting full-time work, increased to 19.1% in February from 18.7% in January. This is an improvement from the 19.9% of February 2011.

Looking Ahead to the Government's Unemployment Report

Last February, the U.S. Bureau of Labor Statistics applied a seasonal adjustment factor of 0.5 points to its unadjusted unemployment rate for the month. If that same seasonal adjustment is applied to Gallup's mid-month unemployment rate of 9.0%, it would produce a seasonally adjusted unemployment rate of 8.5%. Alternatively, if it was applied to Gallup's full-month unemployment rate of 9.1%, it would produce a seasonally adjusted rate of 8.6%. Gallup therefore forecasts an increase in the unemployment rate.Unemployment Rate Not Seasonally Adjusted

Except for the years 2008-2009, and recessions in general, seasonally unadjusted unemployment rate tends to peak in January. Thus it will be interesting to watch Gallup's numbers for the next few months to see if there is a definite change in trend.

It seems as though every time the release of the monthly jobs report approaches, it is always hyped as the most important jobs report of the year. That being said, the release of the monthly Non-Farm Payrolls report often does lead to big changes in stock prices that active investors must navigate in order to stay ahead of the herd. With that in mind, yesterday we released our monthly update on how the market typically reacts to the monthly jobs report based on how the actual numbers come in relative to expectations. This report is available to all Bespoke Premium and Premium Plus clients.

Clients who haven't already read yesterday's report can view it by clicking on the link below. If you are not currently a subscriber and wish to gain instant access to this report and all of the other products that Bespoke has to offer, subscribe today!

It took 44 trading days but the S&P 500 finally had its first all or nothing day of the year on Tuesday. We consider all or nothing days in the market to be days where the net daily advance/decline reading in the S&P 500 exceeds plus or minus 400. After a record number of all or nothing days last year (70), this year the volatility switch went off on January 1st as the S&P 500 went more than two months without an all or nothing day. That finally changed this past Tuesday, when the S&P 500's daily A/D reading came in at -460 as the index itself dropped 1.5%.

Based on the first 46 trading days so far this year, the S&P 500 is on pace for five all or nothing days in 2012, which would be the lowest number of occurrences since 2002. Before we all go celebrating the death of volatility, however, we would note that the first two months of 2012 have not been too dissimilar from the first two months of 2011, when there were only two all or nothing days. Just a reminder that the volatility switch often turns on even more abruptly than it turns off.

Subscribe to Bespoke Premium to receive more in-depth research from Bespoke.

SPOT MARKET prices to buy gold were hovering around $1700 per ounce Thursday lunchtime in London, following the latest interest rate announcements from the European Central Bank and the Bank of England.

Silver prices meantime were hovering around the $34 an ounce mark Thursday lunchtime.

Earlier in the day, gold, silver, the Euro, stocks and commodities all rallied in early European trading, as reports suggested that enough Greek bondholders should agree to the bond swap by this evening’s deadline. The bond swap would see private sector creditors take losses estimated at some 70%.

“When equities drop,” adds one trader, speaking to newswire Reuters, “the pool of available funds for investing in commodities will shrink and gold will be in a bad position…gold is a very risky asset… when gold becomes volatile, it becomes much more volatile than currency or bond markets.”

The ECB’s Governing Council decided to keep its main policy interest rate at 1% Thursday.

“That’s tying their hands on rates for now,” reckons said Klaus Baader, London-based chief Euro-area economist at Societe Generale, speaking before the decision.

Here in the UK, the Bank of England’s Monetary Policy Committee today also voted to leave interest rates on hold, keeping them at 0.5%, where they have been since March 2009. The MPC left the size of its quantitative easing asset purchase program at £325 billion, after extending it by £50 billion at last month’s meeting.

“Businesses running final salary pensions are being clouted by QE,” says Joanne Segars, chief executive of the UK’s National Association of Pension Funds.

“Deficits that were already big now look even bigger because of its artificial distortions.”

NAPF estimates that lower yields on government bonds have added £90 billion to Britain’s pensions shortfall. BullionVault meantime calculates that the average British wage earner has seen the purchasing power of their income eroded by the equivalent of £1410 since QE began in March 2009.

The US Federal Reserve meantime may now have too low a policy rate according to a long-standing monetary policy indicator, the latest commodities note from Standard Bank says.

The Taylor Rule, which signals where the Fed funds rate should be given prevailing inflation and unemployment, is indicating the current policy rate is too low notes commodities strategist Walter de Wet.

“Whether this is a bearish signal for precious metals in general and gold specifically depends on how the Fed reacts relative to what the Taylor Rule suggests,” says De Wet.

“Should the Fed start raising rates, it could mean a rise in real interest rates, which would be negative for investment demand. However, should the Fed keep rates lower than what the Taylor Rule would suggest, we believe that the bullish case for gold especially remains intact.”

The latest US Nonfarm payroll data, showing the number of private sector non-agricultural jobs added last month, are due to be released tomorrow.

German industrial productivity meantime rose more than expected last month, climbing 1.6% from December, official figures published Thursday show.

German politicians meantime are to review the Bundesbank’s management the country’s gold bullion reserves, much of which are vaulted abroad, following criticism of the central bank’s inventory controls by the Federal Audit Office, German tabloid Bild reported Wednesday.

Switzerland’s central bank announced a 2011 profit of SFr 5.4 billion on its gold bullion holdings Friday. The Swiss National Bank’s total profit for the year was SFr13.5 billion, following a SFr19.2 billion loss in 2010.

Last September, following a period of Swiss Franc appreciation, the SNB announced it would peg its currency to the Euro at a rate of no lower than SFr1.20. Then SNB chairman Philipp Hildebrand stepped down in January after it emerged that his wife made a profit on a currency trade initiated before the peg announcement.

Israel has asked the US to supply it with so-called bunker-busting bombs and refueling planes, which “could improve its ability to attack Iran’s underground nuclear sites”, Reuters reports.

The size of the net long position of oil futures traders – which measures the difference between bullish and bearish contracts – “implies that we’ve already priced in a nine-month outage from Iran,” reckons Citigroup oil analyst Tim Evans.

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

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